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This is a Members only post and I am looking for feedback about this Quick Reference to the NEW GFE.  I agree with HUD's Intent that consumers need to shop and compare GFE, however I believe there is a big problem with the New GFE.   I see no problem with the two Origination Fee Items (Box A) on the New GFE.   Where I have my problem is HUD;s suggestion that consumers use the Total of A & B.  

My question is "Do you think Lenders will take advantage of the NO LIMIT ON CHANGES?" with the intent to make their quotes more appealing to consumers. 

 

Tim Bradford
Ohio Mortgage Banker LO.007173.000/ NMLS 250013
Cell: 216.324.8113 Anytime
www.GetAMortgageNow.com or www.Go2Apply.com
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Serving the Ohio Realtors and Home Buyers and Home Owners
 
Posted by Tim Bradford - NMLS 250013 on 12/15/2009 09:51 PM   Comments (9)  
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9 Comments on NEW GFE - Summary of one Problem with HUD's Suggested Comparison.

DEC
15
2009
134,101 Points

I think the fact that the original GFE numbers will show on the final HUD will add a lot of transparency to the transaction.

Hopefully this will keep lenders from taking too many liberties with the "no limit on changes" provision.
9:57pm • #1
193,407 Points 1 Featured Post Outside Blog Attended Rain Camp Called Shot Master

I thought the no limits on changes referred only to buyer selcted items, not Lender items.  Please tell me what I am missing.  Thank you Margaret C.
10:03pm • #2
DEC
16
2009
160,659 Points 1 Featured Post Called Shot Master

Terry and Margaret, Thanks for your comments. 

Terry, you are correct with respect to the comparison at closing on the HUD-1.   The issue I have is that that will be way to late for a buyer to make any changes.  

Margaret, The lenders items are in BOX A.   The section I posted are generally the ones the buyer chooses the provider.   As said to Terry, I suspect some lenders will under quote the items that can change in order to make their GFE more attractive in order to get the deal and then when closing occurs, the numbers will be higher.  

Just my Opinion, It would be a GREAT world if ALL LENDERS quoted the with the same degree of ethics.  If that were true in the past this new GFE would be unnecessary. 
9:29am • #3
385,218 Points 6 Featured Posts Outside Blog

Tim, contrary to what our legislators think, I think that most borrowers are less interested in individual amounts and will continue to look at the bottom line.  So the door to misrepresentation of closing costs is still wide open.

The same low life lenders who have always understated prepaid interest, impounds, escrow and title will continue because borrowers tend to look at the bottom line. 

It is our job to educate consumers so they won't be fooled and we won't lose business to the sharks.
11:34am • #4
688,676 Points 117 Featured Posts Localism Sponsor Outside Blog Called Shot Master

Thanks for the post; I'm parked to see what others have to say.

Mike in Tucson
11:49am • #5
160,659 Points 1 Featured Post Called Shot Master

Bill and Mike,  Thanks for your comments.

Bill, I agree that consumers are just interested in bottom line.  Call me crazy, but nowhere in the GFE does that appear.  If the old GFE goes away the only place buyers will see the Bottom Line is on the last page of the 1003.   If a borrower tries to compare the New GFE against the Details of Transaction, I think they will become more confused.    Also, according to the FAQ on the HUD site, they are still working on the new GUIDE TO CLOSING COSTS.   It is hard to imagine a new STANDARDIZED GFE without HUD having a booklet to Explain it.   Also, when you say "WHAT LEGISLATORS THINK" were you joking???  Did they think this thru and are they prepared?  Consumer Education is the key not a NEW FORM.  The question is how do we educate consumers without offending HUD or violating their rules.  
12:52pm • #6
385,218 Points 6 Featured Posts Outside Blog

Tim, the bottom line is on page 1 where they add lenders costs (Origination Charges) to the other costs.

You are absolutely right!!!!  Consumer education is the only solution.  Consumers are lulled by all the rules to think they don't have to be careful which makes them easy prey to the skunks that figure out how to break or get around every new rule.

Lending is not brain surgery and consumers can be easily taught how to spot the the bad guys.
1:56pm • #7
160,659 Points 1 Featured Post Called Shot Master

Bill,

You are correct that this is the most important for consumers to look at when reviewing a GFE.  Ideally a consumer should ask for all GFE on the same day and for the same Rate of Interest, then compare the Origination Fees represented as "A".   The issue is that in most cases the "B" items (Other Settlement Costs) are NOT Lender Controled.   This is where we need to educate consumers.    
2:20pm • #8
385,218 Points 6 Featured Posts Outside Blog

Tim, EXACTLY, and I just finished a blog on that very subject and credited you for the inspiration.
4:22pm • #9

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Tim Bradford - NMLS 250013

Cleveland, OH

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